Kenyan cement producer ARM Cement Ltd has been placed under administration. Commercial banks took control of the cement producer in a bid to recover the KES15bn (US$14.9m) owed to them. Nigeria-headquartered UBA Bank was appointed joint administrators from PricewaterhouseCoopers (PwC) on Friday.
Muniu Thoiti and George Weru of PwC took over the management of the cement maker on Friday. Mr Weru said the main task is to take control of the firm after which they will conduct an in-depth analysis of its financial health.
Creditors have been requested to file claims by 7 September 2018. The Capital Markets Authority is expected to suspend ARM Cement’s shares from trading when the market resumes today.
Analysts say that asset disposal is the most viable option, but Mr Weru said it is still too early to give a suitable way forward for ARM and that the administrators will evaluate all options, This would include seeking a strategic investor, and going into liquidation would only be considered as the last resort. “We have already engaged some stakeholders among them the NSE, CMA and its directors and shareholders,” he said.
ARM’s latest annual report shows that the firm owed in excess of KES14.4bn to at least nine different banks in December 2017. Stannic Bank is one of the biggest lenders to the firm, having advanced more than KES3.3bn by the end of last year. African Finance Corp had lent KES4.6bn while Barclays Bank of Kenya, Guaranty Trust Bank Ltd and UBA Bank had given ARM KES229m, KES550m and KES340m, respectively, amongst others. In addition to bank loans the cement company also has commercial paper of KES771m, a corporate bond of KES1bn and an income note of KES1.4bn.
The company’s financial results at the end of last year showed a KES6.5bn loss and ARM’s own auditors, Deloitte & Touche, refused to issue an opinion on the financial statements on grounds that they were not certain that the company would still be in existence in the next year as a going concern, reported Standard Media.
Last week, CEO Pradeep Paunrana was ousted following a management shake-up engineered by CDC Group, which owns a 42 per cent stake in the listed cement producer. CDC then proceeded to appoint Linus Gitahi as new chairman.
